File > Open works on STEP files. If somehow that does not work, dragging and dropping the file into a window of SWx without a file open works for me.

After opening, it can ask for what template to use, both for assembly and then for parts, so those should be set up beforehand also.

Then do as David Sloop describes. I also choose All components in the save as box. Things can always be chosen to be broken later, but the other options will normally break stuff you did not want it to.

When I do this with components that I receive from a manufacturer as an Assembly STEP, but we buy the product as a completed Part, I save an assembly as a Part for custom properties, BOM use, and other tracking purposes.

You only have to choose the file type when doing a Save_As. The drop down box is located above the save button. Personally, I prefer to click instead of scrolling through types, because if you select templates or library feature part or other, then it will re-navigate to that associated File Location instead of where I had already navigated to for saving the file where I wanted it.